Fixing Italy, a little bit at a time

Italy has so many wonderful, beautiful amazing places and things, and all if it in an area about the size of California.  And yet, it’s got a lot of problems too.   What drives me crazy in particular is that you can’t copy most of what’s good about Italy, but the bad things are fixable, even if it’s not easy.  With a bit of work, Italy could be a lot better.  It doesn’t have to be perfect, it just has to start moving in the right direction.

Here’s the story of how I helped fix one small problem in Italy, and got to speak briefly in the press room of Italy’s equivalent of the White House.

One day, a number of years ago, I was home with a bad cold and got to thinking about one particular problem in Italy, in one small niche.

In my home state of Oregon, in the US, it cost, at the time, about $50 to register an LLC, or Limited Liability Company. An LLC is the minimum you need to have a “real” company that exists as an entity separate from the people involved in it.  This is important in a number of ways:

  • A company can receive investments.
  • Limited liability means that if you go into business with someone and they do something stupid, you might lose all the company’s money, but you won’t lose all your own money to boot.
  • It’s easy to buy, sell and give out portions of a company.

If you’re doing a more complex company, you would do well to involve a lawyer and accountant in the company formation process, but if you are ok with something really simple, it is possible to create it yourself.

In Italy, on the other hand, you were looking at:

  • Thousands of Euros in fees to the “notaio”, or “notary” (see this article in The Economist: http://www.economist.com/news/finance-and-economics/21646801-highly-regulated-profession-fights-preserve-its-privileges-princes )
  • At least 10,000 Euros of capital that you were required to invest in the company.  That’s insignificant for companies doing things like building a factory, but for two guys who have recently graduated from college and have a bright idea for a web site, it’s potentially a lot of money to tie up in the company right out of the gate.
  • Other various fees and regulations which require professional help to deal with.

All told, the price of creating a company in Italy was several months worth of salary for the average Italian worker, whereas even at minimum wage, someone in Oregon could open that LLC after a few days worth of work.

A lot of things cost more in Italy than in the US, thanks to various taxes, but not many things cost so many times more.

One thing I’ve figured out over the years is that most every country is “business friendly” to their big companies – their Fords, Fiats, Volkswagens and Toyotas.  But there is a big difference in  “business friendly”  for small and new businesses.

Italy, sadly, has not ranked very well in that department: http://www.doingbusiness.org/rankings and it does weigh on people – they tend to go to the UK or Germany or even the US to start a company if their dreams are big.  “At the margin” as economists say, people may look at all the trouble and just decide that it’s not worth it, depriving the country of a potential new business.

There are a lot of hotly contested laws about doing business in Italy, like the ease of firing workers, which have even lead to people being assassinated: http://en.wikipedia.org/wiki/Marco_Biagi_%28jurist%29

I figured that that’s not something I wanted to be involved in, or had any chance of changing in any case, but maybe it would be possible to make some noise and make it easier to start an “SRL” or Società a Responsabilità Limitata – Italy’s equivalent of an LLC?

I reasoned: who would be against making it easier for people to start their own business?

  • The right wing, in Italy, like in the US, has traditionally had a “business” faction, people who want to lower taxes, remove regulations, increase certain kinds of investments, and that kind of thing.  So they ought to be on board, right?
  • The left wing should be in favor of something that can help the little guy out, and make a path to wealth and success available to more people, right?  It’s not fair for the advantages of a limited liability company to only be available to those who already have money, right?

This assumption has turned out to be basically correct – very few people have been out and out against the idea.

Being a software developer, I did the first thing that came to mind: I set  up a web site laying out my arguments: http://www.srlfacile.org/ – I also created a mailing list where people could discuss the idea and collaborate on promoting the idea.  I managed to get some initial interest from like-minded people, along with a lot of supportive comments.  Italy has more than its fair share of cynics, too, and a lot of people told me it’d never happen, so why bother.  I don’t really understand this mentality: of course it’ll never happen if no one tries!  Was I the best placed person to drive something like this?  Certainly not.  I would have happily yielded or joined forces with anyone else willing to work on it.

And then a few days later, the politicians realized it was a great idea and enacted it?  Not exactly…

I got over my cold, and went back to work, and went back to being busy with a lot of other things.  The seed had been planted in my mind, though.

I don’t have much money, and I don’t have friends in high places, either in the US or Italy, so neither one of those avenues  was  available as a way to get the job done.

Instead, over the course of a few years, I tried my best to get the idea in front of as many people as I could – a little bit here, and a little bit there –  via social media like Facebook or Twitter, but also at startup events and things like that.  I continued to hear a lot of support for the idea, as well as a lot of cynicism.  I still have some of the emails from people who were way more qualified than me, in terms of connectedness, money, and knowledge of Italian law, saying it’d never happen.

At some point, I came across ItaliaCamp – a group of young Italians who were enthusiastic about improving their country, and who do have some connections.  They had a contest to select “the best ideas for Italy”, where I entered “SrlFacile”, and it ended up being one of a few winning ideas, which we were invited to then present at the press room of Italy’s equivalent of the White House, “Palazzo Chigi” in Rome.  In reality, the room is on the other side of the road from the actual Palazzo, but it’s still pretty cool to see TV news coverage of various governments, and see the big shots up there on the same stage I was.

As part of winning the selection, the guys at ItaliaCamp were, thanks to their connections, able to get the idea “adopted” by Antonio Catricalà, who was at the time, part of former prime minister Mario Monti’s government.

The entire process of turning the idea into law was not something I was involved in, but it was very long and drawn out.  Naturally, the notaries made a lot of noises about losing a chunk of their business, and how chaos, riots and anarchy would break out without their hands in the till… err, on the tiller.

There’s a famous quote, “laws, like sausages, cease to inspire respect in proportion as we know how they are made.” that seems apt: the end result that was enacted into Italian law is not “perfect” (it was kind of ugly in several ways), but it was a step in the right direction, and has since been further improved on.

When all was said and done and the new law took effect, the people running the government web site were kind enough to mention me, even though I only played a small part in things.

Has this small change improved things for new businesses in Italy?  A bit, I think.  I envisioned an easier, simpler and cheaper process than what is in place now, but still, it has become easier, simpler and cheaper than what was there previously.

More than anything, I think that it resoundingly demonstrates that as a person, you can make a difference, even if you are not rich, powerful, or well-connected politically.

 

6 thoughts on “Fixing Italy, a little bit at a time

  1. Thanks for doing this, David. As Italian expat, this was amazing to read. However, cannot help but noticing that the actual law applies only to under 35s. Not your fault, of course, but yet another evidence of how retarded Italian politicians are.

    Like

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